Seymour Pierce, the stockbroker run by the former Football League chairman Keith Harris, was hit with a £154,000 fine yesterday after the City watchdog found that weak controls had allowed an employee to steal around £150,000 from internal and private client accounts "completely undetected".
The money was stolen in 36 separate transactions over a period of three years. The employee was fired before the thefts were detected and the thefts only came to light after his replacement unearthed what the watchdog described as "serious accounting discrepancies".
The scam made use of unauthorised changes to "static data" that included client's names, addresses, bank account and payment instructions on existing accounts. In addition, on some occasions the member of staff would take advantage of dormant accounts.
The stockbroker reimbursed all affected clients when the employee's activities were discovered. It also qualified for a maximum 30 per cent discount on the fine for settling early and co-operating with the watchdog's investigations. Otherwise the company would have had to pay £220,000.
Margaret Cole, the FSA's director of enforcement and financial crime, said: "This is a serious failure on Seymour Pierce's part. The frauds were not sophisticated and could have been detected at a much earlier stage if the proper procedures had been in place."
Simon Morris, a partner at the law firm CMS Cameron McKenna, said:"Three years have passed since the FSA's first major employee fraud fine so it's surprising to find a firm that has apparently done so little to protect itself and its clients against staff fraud. All firms should heed this warning."Reuse content